ECONOMICS OF HEALTH-ENHANCING FOOD PRODUCTS: DEMAND, STRATEGIES AND POLICY

Consumers' attention to nutraceutical food products (featuring both nutritional and pharmaceutical properties) has been growing; among these, the increased interest for food products which 'may provide a health benefit beyond the traditional nutrient it contains' (American Dietetic Association, 1999) or functional foods, is remarkable. Even though the market for functional foods (broadly defined) shows healthy estimated annual growth rates, several uncertainties make venturing into the production and marketing of functional foods a risky decision, as the demand for these products has not been valuated yet, investments are substantial and legislative frameworks for product with specific health claims, still have not proved their effectiveness. This project aims to investigate several aspects connected with the economics of functional foods of which, so far, very little is known. This project's focus will be that of tackling issues connected with the emergence and growth of functional products from the perspective of consumers, producers and policy makers, respectively. In detail, the role of price, product characteristics and differences in consumers' taste (and health characteristics) will be assessed as to their impact on the demand for functional products. Furthermore, the strategic implications for food manufacturers that venture into the production of these products, in term of both profitability and competition will be measured. Lastly, an evaluation of the issues connected with revising food labeling legislature to include health claims will be evaluated. These issues will be addressed using different economic models and statistical methods applied, initially to a rich database of conventional and functional yogurt purchases in the Italian market. This case study will be expanded as to include U.S. data. The main outcome will be that of improving the knowledge of functional food products from a socio-economic standpoint, and to supply regulatory agencies with a more rounded knowledge of the phenomenon as they proceed to revise the current regulations on food products' health claims.